What is Sustainable Job Creation?
With the news of yet another company closure and the loss of nearly 400 jobs, it brings the total number of jobs LOST in Northern Ireland in the last two years in EXCESS of 11,000. This is remarkably stunning statistic for all the wrong reasons. With a public sector dominant and unsustainable at around 60% of all economic activity, and the stated desire and need to reduce the public sector spend, it is essential we create new jobs in the private to replace those we are going to lose in the next five years in the public sector. What the pundits call ‘rebalancing the economy’.
Whether you are a supporter of this policy or not is a moot point, but one thing is for sure – Public Sector at 60%+ is not sustainable. As a region we have a massive tax deficit which is covered by the ‘NI Block Grant’ from the UK Exchequer, with their increasing inability to fund the gap, and with their intention to reduce it, we need a focused strategy for job creation. Whilst we might all argue about the numbers, nonetheless the principal I think is accepted by all. Successful job creation will have several benefits apart from rebalancing the NI economy, such as, reducing unemployment, re-engaging laid off public sector works, increasing tax pounds, reducing social security spend, increasing investment in health, education, infrastructure and the like, and generally making Northern Ireland a good place to come and live and work.
So, if we all agree to the above, and my sense is that we all do, political parties, trade unions, public , private and voluntary sectors – why are we losing jobs at the rate we are? It’s not just that we are not creating jobs, we are actually losing them at a significant rate. With the double dip recession in the UK and the Eurozone crisis deepening with no end in sight, there are fears that the rate of job will continue well into next year and possibly beyond. Is Northern Ireland at the mercy of world economics? With UK at 8th and Ireland at 27th in the Global Competitiveness Index for 2012-13, we have a choice – which position do we want NI to be closer to?
Which brings me to my point – what is a job and how do you create jobs? You might think this is an easy question, but I think not. Government is often castigated for not spending their/our money on job creation and job support strategies. For example, we hear repeated requests for government to spend again on its capital projects, giving a boost to the construction industry and thus creating jobs and wealth. However, I would argue this can only provide a short term stimulus, or shot in the arm, of the economy. This is not sustainable job creation. At best its an economy boost, and whilst I support whole heartedly the initiative, and others like it, it does not deal with the real issue of job creation.
So, what is a job? A job is created when a company is able to design, make and deliver a product or service which is paid for and the company makes a profit. The more a company sells the more it needs to design/make/deliver so the more people they hire (job creation) and the more profit they make the more they reinvest in people and technology making them more competitive, to sell more. And so the cycle continues. So, in my view, jobs are created by companies, not by governments/policies. They can and should influence, encourage, support, prime, kick start and so on, but ultimately what we need is a private sector hungry to grow.
In what ways can a company grow? and how can we grow the number of companies?
There are four principal ways I think: – (1) Organic Company Growth (2) New Company Start-up/Spin-out (3) Mergers and Acquisitions and (4) Companies locating in NI (FDI). In my last blog of this series, I will be writing about the polices and initiatives that government can do to support, encourage, prime and kick-start job creation. Your feedback is welcome.
Dr Adrian Gundy is with the Centre for Competitiveness where he works with a range of companies and organisations in the areas of innovation, OD and Company Growth.
Be sure to check out the other posts. If you would like to discuss with me how I could help you design your business growth strategy please contact him at: email@example.com